Latest news with #post-Buffett
Yahoo
21-05-2025
- Business
- Yahoo
Prediction: This Will Be The First Major Stock Purchase by Berkshire Hathaway in the Post-Buffett Era
Berkshire Hathaway's portfolio holds a number of financial services businesses across insurance, banking, investing, and payments. While Buffett is known to avoid stocks that trade for a premium, some other top personalities at Berkshire have shown more lenience for growth stocks. SoFi Technologies is an interesting combination of financial services and technology, making it an intriguing opportunity for Berkshire in a post-Buffett era. 10 stocks we like better than SoFi Technologies › Besides news about tariffs, one of the bigger storylines in the financial world as of late has to do with Warren Buffett stepping down as CEO of Berkshire Hathaway at the end of the year. While his resignation came as a shocker for most, tapping Greg Abel as his successor wasn't much of a surprise. Still, the big question on everyone's mind right now revolves around what Berkshire may look like in a post-Buffett era. With a mind-boggling $348 billion of cash and short-term investments on Berkshire's balance sheet, Abel and his team will have a profound level of financial flexibility. I'll break down why I think SoFi Technologies (NASDAQ: SOFI) could be the first major purchase Berkshire makes once Abel takes over as CEO. Two of Buffett's top investment criteria include steady, predictable growth and positive cash flow. The financial services industry is perhaps one of the best ways to achieve both of these parameters. For this reason, Buffett loves investing in banks and insurance. Some of Berkshire's notable positions in the financial sector include American Express, Bank of America, Moody's, Chubb, Visa, and Mastercard. Admittedly, the majority of these companies are much larger compared to where SoFi is today. Moreover, most of these companies have brand moats -- providing them with strong customer loyalty and positions of dominance in their respective pocket of the broader financial services realm. Nevertheless, I see SoFi as a strong candidate as a potential Berkshire investment. Similar to many of the companies referenced above, SoFi offers a variety of lending, investing, and insurance products. This model has helped SoFi build a one-stop-shop ecosystem supporting a variety of financial needs. And if there's one thing Buffett loves in addition to predictable cash flow, it's diversification. Another one of Buffett's investment philosophies is rooted in not paying a premium, even for a quality business. Over the last couple of years, the S&P 500 and Nasdaq Composite have experienced unprecedented runs -- thanks primarily to the artificial intelligence (AI) revolution. But while many of Buffett's cohorts were hitting the buy button repeatedly, Berkshire was actually selling stock in droves -- trimming many of its core positions, including Apple. The reason was simple: Buffett doesn't chase lofty valuations, even in quality growth stocks. While that strategy has clearly paid off for Buffett, I think Abel and top Berkshire lieutenants Todd Combs and Ted Weschler will be more open-minded when it comes to valuation. When you look at the price-to-earnings (P/E) ratio and price-to-book (P/B) value for SoFi, it's clear the stock is far from cheap -- especially for a bank stock. SOFI PE Ratio data by YCharts With that said, more mature banks such as Bank of America or Wells Fargo boast lower P/B multiples compared to SoFi, given their maturity as a business. In other words, it's normal for growth stocks to command premiums earlier in their life cycle and then witness normalization in valuation multiples over time as the business matures. One of Berkshire's smaller positions includes Amazon. SoFi CEO Anthony Noto has previously explained that his vision is to build the banking platform into the "AWS of fintech." AWS is Amazon's cloud infrastructure business, which generates over $100 billion in annual revenue and is responsible for a majority of the company's operating profits. Unlike traditional executives, Noto brings a unique combination of investment banking and operational expertise to SoFi. Prior to SoFi, Noto was a partner at Goldman Sachs and previously served as CFO for the National Football League (NFL) and Twitter. I think this experience will sit particularly well with Abel, who himself is more of an operator as opposed to a typical stock-picking money manager. Noto has helped transform SoFi into an end-to-end financial services platform through both acquisitions and building an ecosystem that keeps customers loyal and sticky. Over time, these positive unit economics have turned SoFi into a consistently profitable business. In addition to Amazon, Berkshire also previously held a small position in fintech company Nu Holdings. Nu is a comparable business to that of SoFi -- with the primary difference being that it focuses primarily on the banking sector in Latin America. While Berkshire has exited its position Nu Holdings and Amazon is less a prominent position in the portfolio, I think the post-Buffett era will feature more flexibility when it comes to high-quality businesses disrupting industries that Buffett himself may have been less comfortable exploring. Another way of looking at it is that I think Berkshire will be less dialed in over traditional earnings-based multiples in select circumstances and be more willing to consider pricier growth stocks. In a way, investors have already gotten a glimpse of this when Berkshire decided to take a position in high-flying AI stock Snowflake prior to its IPO. Notably, Berkshire exited its position in Snowflake after a couple of years -- as the company was late to the game in capitalizing on AI tailwinds. I see SoFi as an interesting combination of what Nu Holdings represents in banking and what AWS has achieved in the world of tech-enabled services. For these reasons, I predict that Berkshire will make a splash and broaden its traditional strategy in financial services by initiating a position in SoFi stock. Before you buy stock in SoFi Technologies, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and SoFi Technologies 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 $642,582!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $829,879!* Now, it's worth noting Stock Advisor's total average return is 975% — a market-crushing outperformance compared to 172% 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 May 19, 2025 Adam Spatacco has positions in SoFi Technologies. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Prediction: This Will Be The First Major Stock Purchase by Berkshire Hathaway in the Post-Buffett Era was originally published by The Motley Fool
Yahoo
08-05-2025
- Business
- Yahoo
Will Berkshire Hathaway Start Paying a Dividend After Warren Buffett Retires? This Billionaire Thinks It Will.
Bill Ackman thinks returning capital will be a bigger priority for Berkshire's incoming CEO. Berkshire Hathaway has never paid a regular dividend under Warren Buffett's leadership. With nearly $350 billion, a dividend wouldn't be out of the question. 10 stocks we like better than Berkshire Hathaway › Warren Buffett shocked Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) investors at the company's recent annual meeting by announcing his intent to retire from the CEO role at the end of 2025. At this point, Buffett's named successor, Greg Abel, will take over the top spot, although Buffett himself will stay on as chairman of the board. Although Berkshire has never paid a regular dividend to investors, at least one notable billionaire investor thinks that could change once Buffett officially steps down. In a nutshell, a dividend has been Buffett's least favorite way to use Berkshire's capital. He has listed his preferred ways to use Berkshire's capital several times, and the top ways (in order) have been: Making sure the current capital needs of Berkshire's businesses are met. Making bolt-on acquisitions to grow the current businesses. Acquiring entire companies to hold as subsidiaries. Investing in non-controlling stakes in publicly traded companies. Buying back stock when it makes good economic sense to do so. If the available opportunities in these categories are less than Berkshire's operating income, Buffett has been happy to let the company's cash stockpile build up. In fact, Buffett has gone so far as to say that if shareholders want income, they should simply sell a small percentage of their shares each year, and that it would have essentially the same effect over time. Billionaire hedge fund manager Bill Ackman recently gave an interview on CNBC to discuss his efforts to create his own "modern-day Berkshire Hathaway," and discussed what a post-Buffett Berkshire could potentially look like. One thing that Ackman emphasized is that he thinks the company is going to start returning more capital to shareholders, and he specifically mentioned a "potential dividend." This is particularly notable since Berkshire never paid a regular dividend under Buffett's leadership. There are a couple reasons why Ackman thinks a dividend could be in Berkshire's not-too-distant future. As the most obvious point, Ackman mentioned how Berkshire has $347 billion in cash on its balance sheet. Buffett has said that he likes to always maintain a $30 billion cushion, and it has been exceedingly hard to find ways to put this capital to work. Beyond the presence of the cash itself, Ackman believes that incoming CEO Greg Abel will take a cautious approach, at least at first, when it comes to making major acquisitions. Ackman's logic is that although Abel is a great capital allocator, he hasn't managed capital on such a large scale. Also, he isn't sure that the new management team will have the same deal-making capabilities that Buffett has. As a result, he believes return of capital will be more of a priority for the new leadership. In addition to dividends, Ackman also believes Berkshire will start buying back stock again. Berkshire bought back stock fairly aggressively from the time its current repurchase authorization began in 2018 through the second quarter of May 2024. During that period, Berkshire spend nearly $78 billion buying back its shares. However, Berkshire hasn't spent a dollar on buybacks since that time. Not only has its stock generally been near an all-time high through much of the past few quarters, but there's now a 1% excise tax on buybacks (part of the Inflation Reduction Act). Buffett cited this specifically when asked about Berkshire's lack of recent buybacks. Ackman not only believes buybacks could return, but that management could be "a little more aggressive in buying back stock" going forward, and for the same reasons why he thinks a dividend could be in the future. Of course, nobody knows what Abel's plans might be, including Bill Ackman. There's no indication from Abel, or anyone else who is employed by Berkshire, that a dividend is on the table anytime soon. However, it's true that nearly $350 billion in capital is a massive amount for a new CEO, so Ackman's logic certainly would make sense. 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 $611,589!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $697,613!* Now, it's worth noting Stock Advisor's total average return is 894% — a market-crushing outperformance compared to 163% 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 May 5, 2025 Matt Frankel has positions in Berkshire Hathaway. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool has a disclosure policy. Will Berkshire Hathaway Start Paying a Dividend After Warren Buffett Retires? This Billionaire Thinks It Will. was originally published by The Motley Fool Sign in to access your portfolio
Business Insider
04-05-2025
- Business
- Business Insider
4 Things We've Learned from Berkshire Hathaway's (BRK.B) Q1 Earnings
It was a big weekend for Berkshire Hathaway (BRK.B). Not only did the company report its first-quarter 2025 earnings, but CEO Warren Buffett also announced plans to step down by the end of the year. Between the financial results and the leadership change, there's much to unpack about what the future holds for one of America's most iconic companies. Protect Your Portfolio Against Market Uncertainty Discover companies with rock-solid fundamentals in TipRanks' Smart Value Newsletter. Receive undervalued stocks, resilient to market uncertainty, delivered straight to your inbox. Here are four big takeaways from Berkshire's Q1 earnings report, and what they tell us about where the company stands today, and where it's headed next. It Was a Tough Quarter, but Not a Crisis Berkshire reported net earnings of $4.6 billion, down 64% from $12.7 billion in the same quarter last year. Most of that drop was due to a $5 billion loss in its investment portfolio. However, Buffett has always said not to put too much weight on these figures since they include unrealized gains and losses that change with the market. Operating earnings – a better measure of the company's businesses – fell 14% to $9.6 billion. Insurance underwriting took a hit, especially with $1.1 billion in wildfire-related claims. But other areas, like Berkshire Hathaway Energy, actually performed reasonably well, with energy earnings jumping 52% from a year ago. The Cash Pile Keeps Growing Even with a soft quarter, Berkshire's cash and short-term investments climbed to a record $347.7 billion. That's up $13 billion from a year ago. Buffett didn't spend much of it. In fact, the company was a net seller of stocks for the tenth quarter in a row and didn't repurchase any shares. But he did reveal that Berkshire almost spent $10 billion recently on a deal that ultimately didn't go through. That's a clear sign that the company is looking to move when the timing is right. Buffett Is Stepping Down, But Not Going Far The biggest news from the annual shareholder meeting was Buffett's announcement that he plans to step down as CEO by the end of the year. Greg Abel is his chosen successor, and he oversees the company's non-insurance operations. Abel has been in line for years and already plays a key leadership role. Buffett said he'll 'hang around' to help but won't run things daily. Importantly, he also said he's not selling any of his Berkshire shares. That should comfort investors as the company moves into its post-Buffett chapter. The Future Looks Steady Despite a rocky quarter, there's no panic in Omaha. Buffett downplayed recent market volatility and reiterated his belief in the strength of the U.S. economy. He criticized tariffs and large deficits but said he wouldn't be worried even if Berkshire's stock dropped 50%. With steady leadership, a massive cash cushion, and a long-term mindset, Berkshire looks ready for whatever comes next, even with a new name at the top. Is BRK.B Stock a Buy, Sell, or Hold? average price target for BRK.B stock is $519.50. This reflects a 3.76% downside potential.
Yahoo
27-03-2025
- Business
- Yahoo
The Smartest Trillion-Dollar Stock to Buy With $1,000 and Hold Forever
Few companies have achieved a market cap of $1 trillion. All those who have are leaders in their respective industries and generally produce market-beating returns. While one could make an argument for investing in every single one of them, the best of the bunch might be the Warren Buffett-led conglomerate Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B). The company, whose class B shares are changing hands for just under $529 apiece, is a brilliant stock to buy with $1,000 and hold forever. Here's why. Let's start with a story. In 2007, Buffett bet $1 million that an S&P 500 index fund would outperform a portfolio of hedge funds over a decade, when including the hedge funds' associated expenses. Ted Seides, a hedge fund manager, took the bet -- and lost. Here's the morale of the story: It's challenging to beat major indexes like the S&P 500 because these indexes are well-diversified. The S&P 500 is home to corporations across every industry and sector. Some are worth above $1 trillion, some less than $10 billion. Economic downturns affect them differently, so even when some aren't performing well, others are. Most investors looking to buy just one stock are better off "cheating" by getting a basket of them through an exchange-traded fund (ETF) that tracks the S&P 500 or some other major index -- or by purchasing shares of Berkshire Hathaway. The conglomerate owns subsidiaries across many different industries. Its portfolio of invested stocks adds even more diversification to the mix. Does Berkshire Hathaway rival the S&P 500 in the diversification department? No, it doesn't. However, you'd be hard-pressed to find a single corporation that gets closer than Berkshire Hathaway in this exercise, and none of the other trillion-dollar companies do. That grants Berkshire Hathaway a significant advantage. Some hedge funds sometimes do perform better than the market. The managers that pull it off are highly regarded on Wall Street -- some have become billionaires. That goes to show that a company's leadership team is one of the best predictors of success, even for hedge funds. And when it comes to outperforming the market, it's hard to get a better leader than Warren Buffett. The Oracle of Omaha has consistently done so for decades. The long-term returns of Berkshire Hathaway put those of the S&P 500 to shame. Few companies have outperformed the market over this period. Even fewer have done so with the same man at the helm. However, Buffett is well in his 90s. He won't be around forever, which is the holding period we are shooting for. What happens to Berkshire Hathaway in a post-Buffett world? All signs point to the conglomerate sticking to the principles and visions that have led to its success. Part of being a great leader is raising and mentoring the next generation. Even without knowing much about the inner workings of Berkshire Hathaway -- or who Buffett might have picked as his successor -- we can be reasonably confident that he has worked on that project. But in fact, we have had confirmation for a long time. Greg Abel, the vice-chairman of Berkshire's non-insurance operations, is the chosen successor. We can go even further. Buffett would have fostered a culture in the company he leads centered around his investing philosophy and other factors that have contributed to his success. He has likely imparted his wisdom to more than just one man. Those who have risen through the company ranks and now hold highly important positions are likely to have soaked up the teachings of the Oracle of Omaha. What will survive after Buffett isn't just one man, whether it's Greg Abel or someone else. It's a well-established, well-diversified, highly profitable company with capable leaders and priceless intangibles that should drive its performance for many years. That's why, if you want to invest in just one company whose market cap is above $1 trillion, Berkshire Hathaway might be the best pick. 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 Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $744,133!* Now, it's worth noting Stock Advisor's total average return is 859% — a market-crushing outperformance compared to 167% 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 March 24, 2025 Prosper Junior Bakiny 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. The Smartest Trillion-Dollar Stock to Buy With $1,000 and Hold Forever was originally published by The Motley Fool Sign in to access your portfolio
