UBS Touts Berkshire Hathaway's Defensive Stance

- Warren Buffett's successor, Greg Abel, will take over as CEO in January 2026 and will have significant capital to allocate, with Berkshire Hathaway's cash on hand reaching a record $382 billion by the end of 2025. - The company's share repurchase activity has slowed, with about $2.9 billion used for buybacks in 2024, a decrease from the approximately $9.2 billion spent in 2023. No repurchases were made in the third and fourth quarters of 2024. - Warren Buffett's investment philosophy dictates that share repurchases only make sense when the stock is trading below its intrinsic value. This principle is the primary reason for the slowdown in buybacks. - While large-scale acquisitions have been infrequent, Berkshire has been actively investing in the energy sector, acquiring Dominion Energy's natural gas assets for nearly $10 billion and spending $3.3 billion for a 50% stake in the Cove Point LNG facility. - The company's operating earnings, which remove the volatility of investment gains and losses, rose to $47.4 billion in 2024, up from $37.35 billion in 2023, largely driven by its insurance operations. - UBS analyst Brian Meredith, while maintaining a "Buy" rating, lowered the price target for Berkshire's Class B shares to $591 from $606, citing lower forecasts for investment income. - Berkshire Hathaway Energy recently spent $2.4 billion to acquire the remaining 8% of the company it didn't already own in October 2024. The energy unit's 2023 earnings, however, saw a 40% decline due to setting aside $1.6 billion for potential wildfire-related losses. - Beyond energy, Berkshire has also built significant positions in Chevron, valued at nearly $21 billion, and Occidental Petroleum, valued at almost $12 billion, making it Occidental's largest shareholder with a 28.2% stake.