Bold Berkshire Hathaway Trade Idea After $15 Million Insider Buying Update
Here's how we can profit as Warren Buffett's old firm looks poised for a stock price breakout.
You're reading 0 of 1 free page.
Register to read more or Unlock Pro — 50% Off Ends Soon
Is it time yet?
Time for what? Time to get back into Berkshire Hathaway (BRK.A) , (BRK.B) , that's what.
For the purpose of connecting with actual retail investors, this article will discuss the BRK.B stock, as the "A" stock is not a realistic investment choice for most home-gamers.
BRK.B has been in rally mode for a few days, after reporting, over the weekend, a 30%-ish drop in operating earnings and surge in the firm's cash pile during the fourth quarter. The culprit? The firm's insurance underwriting segment generated a 54% contraction in operating earnings
That said, the stock has traded sideways for most of the past year, peaking in price back in early May 2025 and bottoming three months later. CEO Greg Abel, who replaced legendary investor Warren Buffett as chief executive, in his annual letter, reinforced the firm's existing culture of value investing, prioritizing profitable businesses over growth. Abel also acknowledged the need to improve margins at the BNSF railway.
News
On Wednesday morning, in a Form 8-K filing with the SEC, Berkshire Hathaway revealed that the firm had restarted repurchases of both class A and class B shares, when the belief is that the stock is trading below the intrinsic value of its parts.
In a Form 4 filing the firm also reported that Abel had purchased $15.3 million worth of company stock for his own accounts. In a televised interview on Thursday morning, Abel said that he would continue to spend his after-tax income on increasing his holdings of Berkshire stock.
The Chart
Readers may recall that I had exited the last of my long position in BRK.B the week before the annual meeting of Friday, May 2, because I felt that the inevitable was coming.
That was somewhat painful. I had always liked Buffett and had even spoken to him (not on purpose, I was covering someone else's phone) twice. The stock peaked at $542.07 that day. Buffett made his famous announcement that Saturday. The stock has never fully recovered.
It's not difficult to see the basing pattern that's been in place since early November. That "rectangle" kicked off with a double-top pattern of bearish reversal that worked out well for those who saw it. The stock is not close to breaking out of anything technical.
BRK.B is, however, trying to take back its 50-day SMA after having retaken its 200-day SMA. Holding those two lines would be key to provoking professional managers, who have exited the stock of late, to think about again increasing long-side exposure. My model suggests that should this stock hold the $94 pivot, that a door opens to prices as high as $568, which would take out the November high.
Interested in laying out some capital for a stock you don't really trust anymore? Me neither. A bull call spread? That might be the way to play this thing.
How about this idea, go out a week and (in minimal lots):
- Purchase one March 13 $495 call for about $5.80
- Sell one March 13 $505 call for roughly $1.90
- Net debit: $3.90
Notes: This trader is risking the net debit of $3.90 to try to win back $10 in a week's time if the shares do break out. That would be good for a profit of $6.10 or 156% should the spread max out.
At the time of publication, Guilfoyle had no positions in any securities mentioned.
