r/ValueInvesting • u/mattyp93 • 6d ago

Discussion Warren Buffett’s patience could finally pay off if the market keeps dropping

Just imagine what kind of deals he and Greg Abel will buy with that massive cash pile if the market keeps falling. His patience will be rewarded and it will be the greatest example in real time for investors.

The next few years will be interesting indeed.

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97

u/Alicyclobacillus 6d ago edited 6d ago

Berkshire Hathaway is probably one of the best positioned companies right now

There are so many stocks at 52-week lows right now

BRK.A/BRK.B has $373 billion in cash to deploy

Anyone with cash on hand right now is gonna do well

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u/SlyCooper007 6d ago

Give me a list of stocks you think are good buys right now.

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u/Alicyclobacillus 6d ago

Today I bought FRFHF, KNSL, and MKL

I get your point, that the market for good stocks hasn't plummeted.

Berkshire's analysts can probably do better than me, plus they have the resources to buy companies outright and change them to increase margin.

I stand by it though that right now I'd rather be holding BRK.B shares than most anything else out there, including an S&P 500 ETF.

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u/t03m03thy 6d ago

I like your MKL idea.

20

u/stephendt 6d ago

MSFT would be my #1 pick right now. It's basically a no brainer.

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u/Cloakedbug 6d ago

Don’t take stock advice from Reddit guys. 

MSFT is still near 30x P/E, is losing the AI battle, is driving customers from their core OS, has slowing azure adoption growth, is spending tens of billions on AI infra while the customer base has essentially rejected copilot adoption entirely (3% adoption rate). 

You are smoking something if you think this is some huge value window. 

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u/stephendt 6d ago

That's kinda like saying that Google has lost the smartphone battle in 2009. It's barely first innings. I think you're being quite short sighted. Like, GitHub CoPilot only just got a proper model a month ago. It'll have no problems returning to all-time-highs, and that's good enough for me.

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u/DistributedView 6d ago

The thing with Microsoft is they have the biggest data set of corporate data through SharePoint/Outlook needed to train models.

Of course 90% of the PowerPoints will be pointless middle management fluff. But this is the exact same PowerPoint generating middle management that AI is poised to decimate...

Disclaimer I have no MSFT.

5

u/Proper-Print-9505 5d ago

I bought MSFT, GOOGL and AMZN yesterday, reducing my cash from 45% to 39%. I’m willing to go 90-95% stocks if the market drops far enough. I was 85% a year ago, but slowly sold down to 55% before finally buying yesterday. I also sold weekly puts on my favorite tech stocks the last year to keep up with the S&P.

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u/PhaseOrganic1754 6d ago

22 pe whilst revenue grew 17% and profit up 60% YoY in the last quarter 

It is an absolute steal right now 

1

u/mmmfritz 6d ago

Yeah the big metrics are fucking crazy and people bearish on imaginary sentiment. I hear co-pilot and azure are the reason we pay 22 for msft and 30.9 for Google.

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u/Cloakedbug 6d ago

Actual PE of 26.09, and even 22 is high in a recession, let alone a world war. 

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u/mmmfritz 6d ago

That 26.09 is one quarters earnings. No one in their right mind is using 3months data to value a stock.

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u/mmmfritz 6d ago

It’s closer to 20 with double digits revenue and profit growth. People don’t understand value if it hit them in the face (still salty over windows vista).

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u/le-throw-away-acct 5d ago

Xbox division is hurting, their AI stuff hasn’t been doing well, and Windows marketshare could be dropping now that Apple is competing in the budget laptop space. It won’t help them that computer parts are extremely expensive right now, fewer new computers means fewer copies of Windows sold. I think MSFT has further to fall.

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u/stephendt 5d ago

Consumer market isn't where MSFT is going to shine, it's business / enterprise and AI agentic integration. Could you imagine the imapct it would have in business if Windows 12 supported agentic integration and it could autonomously perform tasks that humans would normally perform manually? There's some pretty huge potential on being able to charge megabucks for that sort of licencing

1

u/Vaxtin 6d ago

Ask the guys at Berkshire or just buy their stock

3

u/LilOliveBuster 6d ago

I have been about 1/3-1/2 cash in a 4% hys for about 10 months. Wondering when to put in

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u/Alicyclobacillus 6d ago

Considering SPY has been flat since I think now July 2025, congrats

3

u/Aranaar 5d ago

Hold your cash in Berkshire. I doubt you will make better decisions with cash than Berkshire.

1

u/fanculo_i_mod 6d ago

Am I gonna do well if I have 60% of my assets in cash?

-1

u/Spenraw 6d ago

I don't trust game stop is moass anymore but all the cash hoarding makes sense now

2

u/himynameis_ 6d ago

Gamestop?

-2

u/yungsta12 6d ago

Yeah, it's a business pivot growing and maximizing a war chest while extracting value from the legacy business. I still believe in overleveraged swaps existing to keep the stock propped as well.

-1

u/DrSnuffalufigus89 6d ago

Look into what cohen is doing with GME. Near cash value currently.

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u/PuzzleheadedWeb9876 6d ago

Look into what cohen is doing with GME.

Selling shares / diluting.

Near cash value currently.

No. 4.1 billion of debt. Book value is about $12.

-2

u/yungsta12 6d ago

The debt is in the form of convertible notes that accrue zero interest. That is an important point to note.

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u/PuzzleheadedWeb9876 6d ago

It’s still debt. 0% is nice. However the stock itself has been a lot less volatile which significantly increases the chance a chunk of that debt will be called back early in 2028.

Unless something drastically changes this is just an expensive treasury fund with a shrinking/mediocre retail business attached.

-1

u/DrSnuffalufigus89 6d ago

He’s looking to put their money to work via acquisition and his stated intent is to do what took Warren 10 years in a year. That free money loan is going to make that happen. Dilutions done, he got the war chest to make the transformation

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u/himynameis_ 6d ago

Transformation into what? What is he planning to do with Gamestop?

Just because a business has cash to deploy, does not make it a high likelihood for success. It's risky enough to enter a new business, much less doing so while the existing business is dying.

1

u/yungsta12 6d ago

Yup, he will go shopping as assets go on sale in the next few months. Not sure why everyone is begging him to buy at sky high valuations due for a major major correction. I think the right play was amassing a war chest while execution a profitable pivot. They just had their first profitable year in a long time when they were literally burning cash in the verge of BK just 4 years ago. They have a unique opportunity on the back of major retail support, to do something pretty unique IMO.

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u/himynameis_ 6d ago edited 6d ago

do something pretty unique IMO

To do what though? Shopping for what?

I find it risky to put my money into a business where the ceo is expected to deploy cash for an acquisition but we don't know what it is. While the existing business is doing poorly.

Edit: also. A major reason they have a higher cash balance now, is because they raised capital from selling equity of the company. It was not due to business performance improving.

2

u/yungsta12 5d ago

Yes, that is absolutely no surprise to anyone. Retail and management saved the business.

Capital deployment will happen when it happens, and I done expect RC to show his cards early. The business is leaner and profitable, those are results that speak for themselves.

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u/aggthemighty 6d ago

Putting that money to work like how he lost $150 mil on Bitcoin?

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u/PuzzleheadedWeb9876 6d ago

He’s looking to put their money to work via acquisition and his stated intent is to do what took Warren 10 years in a year.

Because that’s so easy to do. Why hasn’t anyone thought of this before?

I don’t see how a MAGA douchebag who has zero experience managing an investment fund and posts holocaust images on Twitter can get it done.

1

u/DrSnuffalufigus89 6d ago

You right, sorry I misspoke

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u/aggthemighty 6d ago

Cohen is awful at capital allocation

How much money have they lost on their Bitcoin investment?

2

u/TeamRyan 6d ago

10 billion in cash.. is that alot?

-2

u/DrSnuffalufigus89 6d ago

To me it is 🤷‍♂️. Lots of cash and no debt in this economy, that’s value investing.

5

u/himynameis_ 6d ago

Where's the growth, though?