New Price Target for Berkshire Hathaway as Warren Buffett Trounces the Market
As the major stock indexes falter, Buffett's firm is sitting on one-third of $1 trillion.
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How does a trader or investor decide which stock to buy? One method involves focusing on sectors that are stronger than the broader market.
Since all the major U.S. stock indexes are currently trading below their respective 200-day moving averages, we can start by looking at sectors that are trading above that key indicator. Let's consider it a sign of relative strength.
For example, financial stocks, represented here by the SPDR Select Financial ETF XLF, have closed above their 200-day MA for four consecutive sessions (shaded yellow). XLF represents large financial institutions, not smaller regional banking names.
Drilling Down
Now that we’ve located a relatively strong sector, let’s look for a financial stock that is strong relative to its peers. Checking the holdings for the XLF ETF, it’s clear that one name stands above the rest.
It’s not Morgan Stanley MS, Goldman Sachs GS or JPMorgan JPM. The standout stock is Berkshire Hathaway BRK.B, the holding company made famous by Warren Buffett. Buffett has been at Berkshire’s helm since 1965.
The Berkshire Hathaway Class B shares are listed as the top holding of XLF, comprising over 14% of the ETF’s portfolio. This fact in particular explains why that ETF is outperforming the broader markets.
Berkshire Hathaway Stands Alone
Berkshire isn’t just beating the markets — it’s trouncing them. The Berkshire Hathaway Class B shares have gained over 17% this year, versus a 6% loss for the S&P 500 and a 10% loss for the Nasdaq Composite.
On Monday, Berkshire Hathaway closed just 1.3% below its all time closing high of 537, which was reached on April 2. Volatility has roiled the markets these past few months, but this stock bounced back quickly.
According to the charts, Berkshire Hathaway has room to run. The stock has formed an ascending triangle pattern (black lines), suggesting a breakout to new highs is near. Based on this bullish pattern, the Berkshire Hathaway Class B shares could climb as high as $575.
On May 3, all eyes will turn to Omaha, Nebraska for the 2025 Berkshire Hathaway annual shareholder meeting. Thousands of investors are expected to attend.
Concerns that are likely to be addressed include the company’s succession plan, as Mr. Buffett is now 94 years old.
Investors will also inquire about Berkshire’s plans for its massive cash pile. The most recent available figures place Berkshire Hathaway’s cash position at $334 billion — literally a third of a trillion dollars.
At the time of publication, Ponsi was long BRK.B.
