Berkshire Hathaway's Valuation in Focus After Exit from BYD and China Portfolio Realignment

If you are looking at Berkshire Hathaway for your next move, the exit from its 17-year investment in Chinese EV maker BYD is bound to catch your attention. This was not just a run-of-the-mill trade; it was a decisive shift away from one of Berkshire Hathaway’s most successful international holdings. The move comes as the Chinese auto market faces new headwinds, with BYD’s domestic sales growth slowing, competition ramping up, and trade tensions between the U.S. and China on the rise. For long-time watchers, this pivot toward a more U.S.-focused portfolio raises questions about what Warren Buffett and his team see on the global horizon.

Stepping back, Berkshire Hathaway has posted an 8% return over the past year and nearly doubled investors’ money over the last three years. Long-term momentum is certainly impressive, but the most recent quarters have been less dramatic, with the stock’s gains moderating even as the broader equity portfolio performed well. Against the backdrop of this portfolio reshuffle and more muted stock price action, it is worth asking if Berkshire’s next chapter will offer the same kind of outsized returns as the BYD play.

After a year of steady but unspectacular performance, is Berkshire Hathaway now trading at a discount because of its portfolio changes, or is the market already baking in the future growth story?

Most Popular Narrative: 21.6% Undervalued

According to the most widely followed narrative from davidlsander, Berkshire Hathaway is viewed as trading significantly below its fair value. This suggests notable upside for investors willing to look beyond recent volatility.

"Berkshire Hathaway's combination of financial strength, disciplined investment approach, and strong leadership makes it a compelling investment option. Based on the company's historical performance and the positive outlook for its future, a net inflation growth of 12-15% in the share price seems achievable. Investors who are willing to adopt a long-term perspective and appreciate the value of quality companies may find Berkshire Hathaway to be a rewarding investment."

Curious what underpins this aggressive upside call? The story hinges on core assumptions that could disrupt conventional expectations. Uncover which bullish financial projections and leadership transition details form the backbone of this valuation narrative. Wondering what sets Berkshire apart from the pack? The specifics driving this investment thesis might surprise you.

Result: Fair Value of $943,785.74 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, any unexpected macroeconomic shocks or a difficult leadership transition could interrupt Berkshire Hathaway’s promising outlook and test investor confidence in the coming years.

Find out about the key risks to this Berkshire Hathaway narrative.

Another View: What About the Market Multiple?

While user-driven valuations point to Berkshire Hathaway being undervalued, a look at traditional market multiples tells a slightly different story. The company’s key ratio is broadly in line with the industry average, which leaves less obvious upside. Could these differing views signal opportunity, or do they raise new questions about future returns?

See what the numbers say about this price — find out in our valuation breakdown.

Stay updated when valuation signals shift by adding Berkshire Hathaway to your watchlist or portfolio. Alternatively, explore our screener to discover other companies that fit your criteria.

Build Your Own Berkshire Hathaway Narrative

If you see things differently or want to dig into the details on your own terms, it only takes a few minutes to construct your own investment narrative. Do it your way

A great starting point for your Berkshire Hathaway research is our analysis highlighting 1 key reward and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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