BRK CASH PILE STILL REMAINS HIGH WHILE KRAFT HEINZ MAKES COMPANY SIGH

🗞️ Big Picture from the CNN Article & Q2 Earnings

• Berkshire Hathaway’s earnings plunged in Q2 2025: Net income dropped from about $30.3 B in 2024 to $12.37 B—a whopping ~59% fall—driven largely by a $3.8 B write-down on its stake in Kraft Heinz The Wall Street JournalReuters.

• Operating earnings (what Buffett watches most) dropped ~4% to $11.2 B, still slightly better than expectations, despite currency losses and weaker insurance results Barron's.

• Meanwhile, Berkshire’s cash pile jumped to an all-time high of around $344 B, making it the largest cash reserve of any U.S. public company Investopedia+1Wikipedia+1.

• The company performed as a net seller of stocks for the 11th straight quarter, and took no share buybacks in Q2—hinting at Buffett’s cautious stance on deployment amid high valuations .

  
  

🧠 Why It Matters (in “Gen Z speak”)

Okay, imagine you’ve been riding a sick skateboard trick for 60 years that crushes average performance... 🎯 Since 1965, Buffett’s run at Berkshire delivered nearly 20% average annual returns, while the S&P delivered about 10%—that’s next-level domination .

But now with Buffett announcing he'll step down as CEO at end of 2025 and hand the reins to Greg Abel, investors are nervous. Since that news, Berkshire’s stock has dipped ~6–8%, while the S&P has climbed ~3%—basically, the famous “Buffett Premium” is fading .

📉 Stock Performance & Leadership Transition

• In 2025 so far, BRK.B stock is up about 4%, while the S&P is up 5%

• But post-CEO news, shares slipped ~6–8% as investors worry about the shift to Greg Abel, even though Buffett will remain chairman .

• All-time highs: BRK.A hit $809,350 on May 2, 2025; BRK.B peaked around $542

• Now it trades at roughly 1.5× book value, down from about 1.7–1.8× in prior weeks

  
  

📊 Key Fundamentals Ratios (BRK.B Class B)

• P/E ratio: ~12.6–12.7× TTM earnings as of mid‑2025—well below its 10‑year average of ~20.7× .

• P/B ratio: around 1.56× book value .

• P/S ratio: ~2.46× .

• P/FCF (price to free‑cash‑flow): internal tools cite ~9.4× EV/EBITDA, but exact P/FCF isn’t always public—EV/EBITDA ~9.4×

• Margins: Strong businesses like Geico reported underwriting margins ~16.5–19%; BNSF railroad profits rose 15–19% depending on source .

  
  

💼 Buffett’s 2025 Portfolio Moves

• Buffett’s held $328–344 B in Treasury bills and cash, representing about 5% of all U.S. T‑bill holdings in the economy—and the highest corporate bond and T‑bill holdings ever seen for any public company .

• Minimal new stock buys overall: but in late 2024/early 2025, Berkshire increased holdings in:

  • Constellation Brands (STZ)

  • Domino’s Pizza (DPZ)

  • Pool Corporation (POOL)

  • Occidental Petroleum, SiriusXM, Verisign .

• Buffett exited or trimmed positions like Ulta Beauty, Bank of America, Capital One, and Citigroup .

• No new mega acquisitions yet—Buffett still hunting for “elephant‑sized” deals 👀 .

✅ TL;DR Summary & Emojis

• Berkshire’s Q2 net profit tanked ~59% due to a big write-down—though operating profit dipped only ~4% 📉.

• Buffett’s announcement to retire sent the stock down ~6–8%—investors nervous about the future without him 😬.

• Crammed full of $344 B in cash/T‑bills, Berkshire has historically outperformed the market (~20% CAGR vs. ~10% for S&P since 1965) 🚀.

• Valuation now looks more reasonable: P/E ~12.7×, P/B ~1.56×, P/S ~2.46× — well below past highs 📉.

• Portfolio tweaks in 2025 included buys in STZ, DPZ, POOL, and exits of select financial stocks; no mega deals yet 🤏.

• Analysts lean Buy, with average 12‑mo targets around $528–$591, though some caution with Hold ratings and lower targets (~$465) ❗.

Analyst

Rating

Target Price

UBS (Brian Meredith)

Buy

$591 (BRK.B); earlier cut from $606; earnings est lowered ~6% to $19.92 /share

Zacks

~Buy/Average

~$537.75 (range $485 – $591)

Consensus (Investing.com)

Buy

US analyst consensus ~$528 average, range $465 – $591

CFRA, TD Cowen etc.

Hold/Market Perform

some maintain lower targets (~$465), caution due to Buffett's departure risk

📰 Headline Moves & Market Context

• Major sell-off: The Dow plunged 2.9%, S&P 500 fell 2.4%, and Nasdaq dropped 2.2%, marking their worst week in months. Small-cap stocks, tracked by the Russell 2000, were hit hardest, sinking about 4.2%

• Why it spooked?:

  • Only 73,000 jobs added in July, well under expectations, pushing U.S. unemployment to ~4.2% and triggering investor panic over slowing growth

  • Trump unveiled sweeping new tariffs effective Aug 7 for dozens of countries, reigniting global trade tensions and increasing uncertainty

    
    

🧠 Market Sentiment & Analyst Reactions

• Even with strong earnings from giants like Microsoft, Meta, and Apple, broad investor sentiment turned bearish due to the job weakness and geopolitical trade risks

• Some strategists are now warning of a broader U.S. valuation bubble—not just in Big Tech, but across the “Terrific 20” stocks in various sectors, with leverage and speculative trading driving risks

• That said, others see potential buying opportunities amid this dip—especially in resilient stocks or those at technical support zones

🔎 Stocks to Watch Now

Some companies are holding strong and could be potential bargain spots:

• Alphabet, Elbit Systems, Rollins, Agnico-Eagle Mines, and Blackstone are near key support levels and showing signs of investor interest despite the broader downturn

  
  

📅 What to Expect This Week

• Earnings spotlight: Big names like AMD, Palantir, Caterpillar, Eli Lilly, Shopify, and others are due to report. Their performances—especially in AI, tech, and industrials—could influence market direction

• Economic updates ahead: Investors are watching ISM services reports and further labor data for clues on Fed policy shifts and the strength of the economic outlook