Berkshire Hathaway: Cash Hoard Likely To Be Underutilized For Longer (Archive)

This 5-Minute Pitch was originally published on Seeking Alpha before the launch of the Hunting Alphas website. It is shared here to showcase my previous work and track record. New 5-Minute Pitches published on this site will not be disseminated anywhere else.

Elevator Pitch

• Berkshire Hathaway missed EPS estimates in Q3 FY24 due to losses in the insurance segment. However, I believe the bigger picture ought to focus on the conglomerate's capital allocation.
• Cash buildup is occurring but opportunities to deploy may not come soon as the S&P 500 is rising driven by sustainable EPS growth not overhyped multiple expansion.
• Valuations are elevated for Berkshire at 1.62x P/B levels; a historical peak vs the median P/B of 1.46x.
• There is some upside potential amid broader range-bound relative technicals. However, I think this is too short-term to justify a longer multi-quarter or multi-year bullish view.
• I am cautious about the next innings of Berkshire Hathaway, specifically, its ability to make good, meaningful capital allocation decisions.

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