Berkshire Hathaway Draws Investor Attention Amid Slipping Behind S&P 500

Berkshire Hathaway's shares declined about 1% this past week, while the S&P 500 climbed 0.6% to reach a new all-time high. This widened the gap between Berkshire's B shares and the benchmark to 11.3 percentage points year-to-date.

Although Berkshire's stock has fallen 13% from its peak nearly a year ago, some investors see opportunity in the dip, especially as CEO Warren Buffett plans to step down by the end of 2025, raising questions about the company's future direction.

Berkshire's Stock Performance Trails S&P 500

Since early May last year, Berkshire Hathaway's A and B shares have dropped 13%, contrasting with a 26% gain in the S&P 500. This underperformance has intensified investor scrutiny, especially as Buffett's planned departure approaches.

Value Investors See Potential in Berkshire's Current Price

Analysts like Andrew Bary of Barron's suggest that Berkshire's current valuation requires only modest positive developments to outperform the market, even without Buffett at the helm. Christopher Davis of Hudson Value Partners highlights Berkshire as a prime example of a 'HALO' stock—Heavy Assets, Low Obsolescence—offering durability and inflation protection.

"Berkshire is the ultimate HALO company, given the durability and inflation protection of the insurance business and the very-hard-to-replicate industrial operating businesses."—Christopher Davis, Hudson Value Partners

Stock Buybacks and Management Changes Signal Strategic Moves

UBS analyst Brian Meredith estimates Berkshire is trading at an 8% discount to intrinsic value and expects buybacks to accelerate, with repurchase targets raised to $1.7 billion for 2026. Meanwhile, CEO Greg Abel has reportedly sold off stocks managed by departing portfolio manager Todd Combs, consolidating portfolio control.

Combs, who left for JPMorgan Chase, managed about 5% of Berkshire's $320 billion portfolio, including stakes in technology and financial firms like Amazon, Visa, and Mastercard. The company sold 77% of its Amazon shares in Q4, possibly linked to this transition.

Walmart Surpasses Berkshire in Market Value

Over the past year, Walmart's shares surged over 35%, while Berkshire's classes A and B shares fell nearly 12%. This shift pushed Walmart ahead of Berkshire as the ninth most valuable U.S. company, a position it last held in 2013.

Warren Buffett Praises Tim Cook as Apple CEO Transition Looms

Following the announcement that Apple CEO Tim Cook will step down in September, Warren Buffett lauded Cook's leadership, crediting him for Apple's current success. Despite reducing Berkshire's Apple stake by 75% since mid-2023, Apple remains the largest holding in Berkshire's portfolio, valued at nearly $62 billion.

"Apple would not be the Apple of today without Tim Cook. What he has done with Apple could not be done by anybody I've known."—Warren Buffett

Looking Ahead: Berkshire's Upcoming Shareholders Meeting

Despite Buffett's absence from the stage, attendance at Berkshire's annual meeting remains strong, driven largely by local shareholders and the appeal of discounts at Berkshire-owned retailers. CEO Greg Abel is expected to provide a business update and address questions about the company's cash reserves and investment strategy.

The meeting will be streamed live on CNBC.com, featuring Q&A sessions with key executives, offering investors insight into Berkshire's future direction amid leadership changes and market challenges.