Berkshire Hathaway

Berkshire Hathaway closed May 12, 2026 at $479 — down 8% from the December 2025 peak of $520. The 52-week-position of 36.9% means BRK-B is one of the weakest mega-caps year-to-date. The reason: this is the first year of the Greg Abel CEO transition (effective January 1, 2026), and the market is in show-me mode on whether Berkshire without Buffett-at-the-wheel maintains the disciplined-capital-allocation premium.

The fundamentals are still extraordinary. Q1/2026 operating earnings hit $11.4B (a record), with insurance underwriting profit of $2.7B and BNSF returning to volume growth (+3.1% YoY). The Berkshire cash pile reached $325B at March 31, 2026 — a record by $40B over the previous record set in December 2024. Apple remains the largest equity position at $76B (reduced from a peak of $174B in 2023). The $325B cash question — how Greg Abel deploys it — is the single most important narrative for 2026–28.

The 2025 annual letter (Buffett's last as CEO, dated February 22, 2026) was unusually personal. Buffett confirmed Abel as 'now operating with my full delegation' but noted he 'will remain involved in capital-allocation decisions exceeding $5B until I am physically unable.' Practical translation: Abel runs day-to-day, Buffett still vets large M&A. The succession is partial, not total. The market is pricing for full Abel transition, which has not happened.

Berkshire is itself the smart-money flagship — but the smart-money holding Berkshire is a meaningful signal. Bill Ackman's Pershing Square initiated a 1.3M-share BRK-B position in Q4/2025, citing 'a generational asset trading at fair value during a once-in-a-generation transition.' Bill Gates' Cascade Investment holds 4.5M shares (a position Gates has kept since 2003, untouched through the transition). The combined Buffett-family trusts hold 12.7M shares directly, with all of Buffett's personal stake committed to charitable foundations over the next decade.

The notable non-buyer is institutional momentum capital. Index-fund flows into BRK-B turned net seller in Q1/2026 (-2.1M shares) as growth-index inclusions rebalanced away from Berkshire's smaller weighting. Active growth funds (Wellington, T Rowe Growth) remain underweight or have eliminated positions, citing the 'Buffett transition risk.' The bear case is therefore concentrated in active-momentum hands; the bull case sits with patient long-term capital.

Insider activity (Form 4): no Buffett insider sales beyond the ongoing scheduled charitable conversions to Gates Foundation et al. Greg Abel has not bought a single share on the open market since being named CEO designate in 2021 — a soft-bearish signal that mattered less when Buffett was running things and matters more now. Charlie Munger's estate (Munger passed in 2023) liquidated 9,000 BRK-A in Q3/2025 per the will — a forced sale, not a directional call.

Berkshire Hathaway trades at a forward P/E of 22.6, P/B of 1.45×, and EV/EBITDA of ~13.5 as of May 2026. The honest framework is sum-of-the-parts because Berkshire is a holding company. Insurance segment intrinsic value: $280/share (using 1.5× tangible book including float optionality). BNSF + BHE: $90/share. Manufacturing/Service/Retail: $50/share. Equity portfolio (mark-to-market): $130/share. Cash net of debt: $90/share. Sum: $640/share intrinsic value vs. current $479 — implying 34% upside on the conservative sum-of-the-parts framework. The Wall Street consensus is unusually quiet on Berkshire (only 4 sell-side analysts cover it); median target $520 (8.5% upside), with the bull-case at $580 (HSBC, full transition success) and bear-case at $410 (UBS, transition-multiple-compression). Buyback math is the floor: at sub-1.45× book, Berkshire historically buys back $5–$10B annually. At the current price, the buyback yield alone is roughly 1.5%, providing technical support.

1. August 2, 2026: Q2/2026 earnings — first full quarter under Abel; capital-allocation language in the report is the key signal
2. November 2026: Q3/2026 earnings + any large M&A announcement — Abel's first true big-deal test would meaningfully de-risk the transition multiple
3. February 2027: Annual letter — first Abel-authored letter; the tone-and-tenor will frame the 'is this still Berkshire?' question for the long-term holder base

Berkshire is the position I add to on weakness, not chase on strength. At $479, you are getting a $325B cash optionality plus a high-quality insurance franchise plus the deepest set of wholly-owned operating businesses in corporate America — for a forward P/E of 22.6. The Greg Abel transition is the real risk, but it is also the reason for the current valuation discount; if Abel executes for 18 months without obvious missteps, the multiple should rerate back to the 1.55× book/$520 level. My add-trigger is below $440 (sub-1.35× book), which would put Berkshire on the buyback-active list and put me in alignment with Pershing Square's entry zone. For long-term holders, the simple math is: 10% annual return assuming 12% book-value compounding minus ~2% multiple compression risk over five years. That is a perfectly fine permanent-capital outcome for a 5–10% portfolio position — but not the 'beat-the-market' position it was 20 years ago.