Berkshire Hathaway, the $860 billion conglomerate that is synonymous with Warren Buffett’s steadfastness, is facing its first major test of investor confidence in decades.
Since Buffett announced his retirement in May, Berkshire’s “Buffett premium” that trust investors have priced into the company’s stock appears to be rapidly fading.
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The Buffett premium is crumbling — can Greg Abel earn Wall Street’s trust?
BarCharts reported that Berkshire Hathaway has formed a death cross with its 50-day moving average below 200 days for the first time since August. The last time this technical signal appeared, it signaled a market bottom.
However, things are different this time. Since Buffett announced his retirement, the company has underperformed the S&P 500 index by 34%.
Critics say the market is simply recalibrating after decades of Mr. Buffett’s control. But supporters see the decline as a blip in a broader tech-driven bull market.
Berkshire Hathaway’s Class B shares are currently just $3 off the RSI of 30, a rare sign that they may be oversold.
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Still, the numbers tell a cautious story. Since May, Berkshire’s stock price has risen only about 5%, while the S&P 500 index, fueled by AI and tech stocks, has soared more than 35%.
Mr. Buffett’s unwavering value investing philosophy has left the company with $344 billion in cash, a number that confirms both caution and market hesitation.
“History tends to rhyme when Berkshire underperforms the S&P while maintaining record cash levels. When that happens, the market almost always doesn’t calm down for long,” investor Peter B wrote in X.
Code Question: Will Abel Break the Mold?
For crypto investors, this leadership change raises a more speculative question: Could Buffett’s successor, Greg Abel, be more open to Bitcoin?
Buffett, now 95, has long mocked the asset class, calling it “rat poison squared” and predicting that it will “end badly.” His successor, the 63-year-old vice chairman of non-insurance operations, has remained silent on cryptocurrencies, sparking market speculation.
“While Buffett is famously negative about the crypto market, Greg Abel does not have strong opinions on the asset class,” Juan Pellicer, head of research at Centra, recently told BeInCrypto.
Mr. Abel will likely continue Mr. Buffett’s legacy and focus on businesses that generate tangible cash. Still, Berkshire’s quiet investment in New Holdings, a Brazilian digital bank with crypto exposure, suggests the door may not be completely closed.
Wall Street’s faith in Greg Abel remains untested, but investors are debating the end of the ‘Buffett premium’ as Berkshire’s technicals show warning signs.
